My prediction: eventually Cyprus will have to restructure the other big problem bank too. This will cut further from the needed €5.8 bn. Would be ironic as that was the original proposal by Troika last Friday - to restructure the two biggest problem banks while cutting 30-40% of big uninsured deposits and protecting the insured ones.

Troika's offer was the best one Cyprus could get. It'd have been better a year earlier, but then-president Christofias thought he could get a better deal from Russia. History has a tendency of repeating itself, apparently.

It's interesting that Russians have punted the ball back to Troika. Now either Cyprus accepts the deal, forces EU to offer a better one, or throws another hissy fit and burns the few remaining bridges. Both of the last two options are beneficial to Russia - either shaming EU or driving down the eventual price Russia will acquire Cyprus for.

Now either Cyprus accepts the deal, forces EU to offer a better one, or throws another hissy fit and burns the few remaining bridges.

I don't think there will be a much better deal from troika - some cosmetic enhancements perhaps. The situation has deteriorated from last Friday, and the square one we'd be going back to is worse than last week.

I think rejecting the proposal of restructuring Laiki and Bank of Cyprus was a big mistake, probably based on hopeful thinking.

damage already done, up to us if it is irreparable
reports of BOC on verge of default are "untrue"
there's no importance if we don't take the right decision today
better to lose the battle than to lose the war
Maybe we should go for depos haircut. Better for hit on banking sector than whole economy

No money from Moscow, no money from EU and IMF until conditions are met. Cyprus has tried running with the hare and hunting with the hounds for long enough.
Looks like Cyprus has to start creating a normal economy.

I don't know if it was the best, but I can't understand some of the "anti-memorandum" political parties in Greece, that yesterday were practically celebrating that Cyprus didn't accept the deal.

They had been saying that supposedely europe is after our "oil reserves" (meanwhile they haven't been proven to exist yet) and that Russia / China / Venezuela or sth would give us a better deal, and saying no to the IMF would solve all the problems. Look at the situation in Cyprus now, they have started to have problems supplying the super markets.

Russia is hesistant to get involved and even if they do they'll directly ask for gas (without even some kind of hidden nefarious conspiracy). Imagine if this shit happened in Greece that we likely don't even have the gas. I am not sure if some of them are demagogues, irresponsible, the "drachma lobby" of certain usually indebted enterpreuners that would quickly profit by a grexit, or completely retarded. OK I think a grexit is an alternative option, but I don't understand some of the euphoria I saw.

Especially the "anti-memorandum" right, they are like "hell yeah the cypriots are the real greeks they said no to Merkel, and now merkel is crying she's shitting brix, haha go Russia, she hasn't eaten breakfast this morning" (meanwhile they are about to say yes to selling the place to Russia, what's the point with all the oil reserves conspiracies then?)

Russia is hesistant to get involved and even if they do they'll directly ask for gas (without even some kind of hidden nefarious conspiracy).

Yup. Russia doesn't bother with conspiracies when they're operating from a position of power. It'd be naïve to think the talks in Moscow went just "can we have some money?" - "no" - "ok". Whatever Cyprus offered the Russians didn't want, and whatever Russia asked for Cyprus wasn't willing to give.

They also have a strong base of around 500K (*4 with relatives etc.) who are strongly favored by the current system. ANEL got an 8% of the votes in pretty much 3 months with little TV exposure etc., how would you think that would happen, the ND syndicalists trade unionists some of the Karamanlis' clique etc. all got in a meeting, chose Kammenos for his "Greek Nigel Farage" image, sent the message through their channels and bam 8%. The rebel rhetoric is more or less just rhetoric, what they'd actually do if they got in power is serve their base, most likely still in the EU, except securing their rights and trying to shift all the burden to others.

B) Russia Deal: Give Russia gas exploration rights in sea around Cyprus and Russia military navy base in Cyprus for Mediterranean, no new taxes, citizens happy.

I can see why they can't make their minds up, but now neither the Troika or Russia will change their offers, you'll see the government of Cyprus desperately go from one to the other over the next few weeks begging for more fair terms, and then eventually they will probably choose the Russian deal, because at the end of the day the government wants to stay in power, and that means votes, and that means keeping the citizens happy and no special taxes.

'Absolutely ridicolous' as in absolute terms, possibly. But in relative terms, i.e. given the circumstances, that's the best deal available. In short - the Troika is willing to risk more than any other potential party to get Cyprus out of the hole it's dug itself into.

The troika is still lending money, probably more than the russians could and definitely at better interest rates. And how else is Cyprus going to raise the money? Austerity cuts like greece where everybody complained about but now on the scale of 5.4 billion, raiding pension funds, selling future resource revenue while everyone knows they're desperate for money? At least taxing deposits would have hit mostly foreign depositors evading taxes, and the people of Cyprus would have been spared the larger burden for enough time to figure a new source of income. Now what?

Troika's proposal to restructure the two problem banks Laiki and Bank of Cyprus was not ridiculous at all. Considering the circumstances it was quite sane. Yet Cyprus rejected it.

Now that Cyprus on it's own accord has already decided to restructure Laiki and it seems probable that CoB is next, it seems that it might have been better to take Troika's offer and do that necessary restructuring a week ago already.

They knew that since whenever Cyprus joined the EU. They didn't have a problem with that so far. Now their in a shit situation (which is totally different than greece's) and need help. Cyprus needs not even a tenth of what help Greece got.

The proposal of restructuring those two banks included guarantee for insured savings up to €100 000, and the uninsured big deposits would have taken the haircut.

And that's exactly what's happening to Laiki now, and probably will happen to CoB too.

How's that good?

There have been no "good" options left for a long time. Troika's proposal of restructuring the two problem banks was one of the sanest options left. Instead of rejecting it, it might have been better to take Troika's offer as a basis, to refine it in details and to start doing that necessary restructuring a week ago already - as it's gonna happen anyway.

Guess what happens when banks open after doing haircuts? Correct, bank run and bank sector collapse.

Now that Russia doesn't want to bail them out alone (though they did extend their older loan and lowered interests which is a win for Cyprus) i believe that Cyprus's best action course is to do what EU fears the most, get out of the eurozone and start printing its currency. Yeah hyperinflation and all of that, but at least it will be in their control and can pull it off. Besides, may attract a lot of investors since they become cheaper.

Because printing your own currency to get out of debt will not devalue your deposit holders at all. /s

It was being in the Eurozone that gave Cyprus the opportunity to blow out it's financial sector to ridiculous levels. What sort of financial operator do you think Cyprus will be if they are operating on a Cypro currency?

Guess what happens when banks open after doing haircuts? Correct, bank run and bank sector collapse.

Here's the list of options without a possibility of a bank run:

That list has been empty since at least January, probably even for a year.

Now that Russia doesn't want to bail them out alone (though they did extend their older loan and lowered interests which is a win for Cyprus)

Well, Russia never said they wanted to bail Cyprus out anyway - and honestly, can't blame them for that. Already in January they said that rather EU and Cyprus should carry the biggest burden of the bailout, and that they might help a little but only with "certain conditions". Very good indeed if they gave an extension on their loan to Cyprus.

i believe that Cyprus's best action course is to do what EU fears the most, get out of the eurozone and start printing its currency. Yeah hyperinflation and all of that, but at least it will be in their control and can pull it off. Besides, may attract a lot of investors since they become cheaper.

Why? So someone invests sum X in some high yield, but risky stuff and the investments are written off. As they say: easy comes, easy goes. It makes perfect sense that these investors lose part of their money. The part that didn't absolutely make sense was to use everyone's savings for that by the Cyprus government. The russians and bankers obviously control their politicians.

The way savings accounts work is that the money is used to lend out as investments, it doesn't just stand still in a bank. You cannot disentangle bank investment from savings accounts, it goes against the concept of a bank. The fact that savings accounts are now a necessity to work in the world is a flaw, but that happened recently.

So who did you want to actually pay it off? Yes it's the bankers fault, but what can you do now? I doubt they have 3 billion cash that you can take from them. And everyone who held money in Cyprus banks did so under a clear contract, you can't just tax people whenever you want however you want or people will lose trust in you.

you can't just tax people whenever you want however you want or people will lose trust in you.

Isn't that exactly what the plan of using retirement fonds to come with up with some of the 5.8 bill entails? The plans of the cypriot government is to screw the small people in order to not drive the big mobsters and tax refugees out. What the cypriot government clearly doesn't understand is that it has to change.

Well at least an orderly insolvency wind down will get the small depositors most or all of their funds. Eventually. Assuming the politicians and bankers don't figure out a way to rig it, cough debtor priority.